Digest (periodic roundup)

Q2 2026 employment roundup: wage increases, day-one rights, and new enforcement

April 2026 brings three major employment changes: National Minimum Wage increases across all age bands, day-one employment rights under the Employment Rights Act 2025 (including statutory sick pay, paternity leave, parental leave, and bereavement leave), and the launch of the Fair Work Agency as a unified enforcement body. This digest summarises what changed and what employers must do to comply.

Change event: National Minimum Wage and National Living Wage increase April 2026 Effective 1 April 2026

Overview

April 2026 marks a watershed moment for UK employment law. Three significant changes take effect within a single week, fundamentally reshaping employer obligations around pay, leave entitlements, and enforcement.

On 1 April, National Minimum Wage and National Living Wage rates increase across all age bands, with 18-20 year olds seeing the largest percentage rise. Just five days later on 6 April, the Employment Rights Act 2025 brings day-one rights for statutory sick pay (with no waiting days), paternity leave, parental leave, and bereavement leave — the most significant employment law reform in a generation. The following day on 7 April, the Fair Work Agency launches as a unified enforcement body, consolidating functions previously split across HMRC, the Gangmasters and Labour Abuse Authority, and the Employment Agency Standards Inspectorate.

Collectively, these changes strengthen worker protections, increase compliance costs, and significantly raise enforcement risk. Employers must update payroll systems, revise policies, and train managers before the changes take effect.

Changes covered
3 regulatory changes
Period
April-June 2026
1 April 2026
National Minimum Wage and National Living Wage increases
6 April 2026
Day-one SSP, paternity leave, parental leave, bereavement leave
6 April 2026
Protective award for collective redundancy rises to 180 days
7 April 2026
Fair Work Agency launches

National Minimum Wage and National Living Wage increases

From 1 April 2026, all age bands see wage increases following the Low Pay Commission's recommendations. The National Living Wage (21 and over) increases, and the 18-20 year old rate sees the largest percentage rise of any age band.

Employers must update payroll systems before the first pay period starting on or after 1 April 2026. HMRC enforces minimum wage compliance through inspections, can issue Notices of Underpayment requiring arrears and penalties, and publicly names non-compliant employers.

Key actions: Review pay rates for all workers (including apprentices, piece workers, and salaried employees whose effective hourly rate may fall below the new minimums). Update payroll by 1 April. Check that deductions for uniforms, tools, or accommodation do not reduce pay below the minimum wage.

Day-one employment rights: ERA 2025 April phase

The Employment Rights Act 2025 received Royal Assent on 18 December 2025 and is implemented in phases. The April 2026 phase brings day-one rights to several statutory entitlements previously requiring service periods:

  • Statutory Sick Pay (SSP): Payable from day one of employment with no waiting days (previously required 4 consecutive sick days before payment started). No lower earnings limit — all employees are eligible regardless of earnings. Rate is 80% of weekly earnings or the flat rate (£123.25 for 2026/27), whichever is lower.
  • Paternity leave: Day-one right (previously required 26 weeks' service). Statutory Paternity Pay still requires the lower earnings limit.
  • Unpaid parental leave: Day-one right (previously required 1 year's service).
  • Bereavement leave: Now a statutory entitlement from day one, including for early pregnancy loss.

Additionally, the protective award for collective redundancy breaches increases from 90 days to 180 days — a significant cost risk for large-scale restructures.

These changes do not apply in Northern Ireland, where employment law is devolved.

Key actions: Configure payroll systems to pay SSP from day one with no earnings test. Update sickness absence policies to remove references to waiting days. Review and update family leave policies to remove service requirements. Train HR and line managers on day-one eligibility. Communicate new entitlements to all employees.

Fair Work Agency launch

The Fair Work Agency (FWA) launches on 7 April 2026 as a new unified employment enforcement body, chaired by Matthew Taylor CBE. It consolidates enforcement functions currently spread across HMRC (National Minimum Wage), the Gangmasters and Labour Abuse Authority (GLAA), and the Employment Agency Standards Inspectorate.

The FWA enforces National Minimum Wage and National Living Wage (including underpayments, record-keeping, and arrears), statutory sick pay, holiday pay, employment agency and employment business regulations, and modern slavery and labour exploitation. Significantly, the FWA can bring employment tribunal claims on behalf of workers even if the worker chooses not to — a major shift from the previous fragmented enforcement landscape.

The FWA has powers to inspect workplaces, require employers to produce evidence of compliance, and issue Notices of Underpayment and penalties for NMW and holiday pay breaches. Employers should expect a more proactive, co-ordinated enforcement approach with broader visibility across multiple compliance areas.

Key actions: Review compliance across all FWA enforcement areas (NMW, SSP, holiday pay, agency worker regulations, modern slavery). Ensure records are audit-ready. Train managers on enforcement risk. Consider engaging specialist employment law advice if you operate in high-risk sectors (hospitality, retail, care, logistics).

❗ Combined action checklist

Employers must take the following actions before April 2026:

  • By 1 April 2026: Update payroll systems with new NMW/NLW rates. Review all worker pay rates including apprentices, piece workers, and salaried staff.
  • By 6 April 2026: Configure payroll to pay SSP from day one with no lower earnings limit. Calculate 80% rate for all employees. Remove waiting days from sickness absence policies.
  • By 6 April 2026: Update family leave policies to remove service requirements for paternity leave and parental leave. Add bereavement leave (including early pregnancy loss) to policies.
  • By 6 April 2026: Update HR systems to process leave requests from day-one employees.
  • Before 7 April 2026: Audit compliance across NMW, SSP, holiday pay, agency worker regulations, and modern slavery. Ensure payroll records are audit-ready.
  • Ongoing: Train HR staff and line managers on day-one rights, SSP calculation, and Fair Work Agency enforcement powers.
  • Ongoing: Communicate new entitlements to all employees through handbooks, intranet, and team briefings.

⚠️ Enforcement and penalties

The Fair Work Agency has significant enforcement powers from 7 April 2026:

  • National Minimum Wage: Notices of Underpayment require payment of arrears plus penalties of up to 200% of underpayment (capped at £20,000 per worker). Public naming of non-compliant employers. Criminal prosecution for deliberate breaches.
  • Statutory Sick Pay: Tribunal claims can be brought by the FWA on behalf of workers. Awards cover unpaid SSP plus compensation.
  • Holiday pay: The FWA can issue enforcement notices and bring tribunal claims. Unlawful deduction of wages claims can cover up to 2 years of unpaid holiday.
  • Agency workers: Equal treatment failures can result in tribunal awards covering pay gaps and compensation for breach of rights.
  • Modern slavery: High Court injunctions, contempt of court (unlimited fine), and significant reputational damage for failure to publish annual statements.

The FWA can bring claims even if workers choose not to, significantly increasing enforcement risk.

ℹ️ Northern Ireland: devolved employment law

Employment law is devolved to Northern Ireland. The Employment Rights Act 2025 does not apply in Northern Ireland. Day-one SSP, paternity leave, parental leave, and bereavement leave entitlements do not take effect on 6 April 2026 for Northern Ireland employers or workers.

If you operate across Great Britain and Northern Ireland, you must maintain separate policies and payroll configurations. National Minimum Wage rates apply UK-wide and increase on 1 April 2026 in Northern Ireland.

Monitor the Northern Ireland Assembly for any equivalent legislation. The Fair Work Agency operates across the UK, but its enforcement remit in Northern Ireland is limited to reserved matters (primarily National Minimum Wage).

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